TIM mulls enterprise unit stake sale as Netco decision nears

It’s hard to keep track of Telecom Italia’s (TIM) plans to sell off various bits of the group to raise much-needed cash and reduce debt. There have been more twists and turns along the way than in your average spaghetti carbonara, and matters still look far from settled.

Latest reports are saying that TIM now wants to sell a minority stake in its TIM Enterprise business unit, which serves large enterprise and public administration customers in Italy. A report from Bloomberg says that TIM has sent invitation letters to sound out potential investors.

If this sounds familiar, it’s because a sale of the enterprise division was already mooted last year, even before the division had been established.

In March 2022, UK-based CVC Capital Partners proposed buying a 49% stake in a planned “ServCo” that would encompass enterprise services as well as Noovle, Olivetti, Telsy and Trust Technologies. However, that bid was ultimately rejected.

In September 2022, Reuters then reported that the company had set out to launch a sale process for a minority stake in its enterprise service arm. The TIM Enterprise organization was only formally established in March 2023, and is potentially valued at more than €6 billion (US$6.6 billion), Bloomberg reports.

Weighing up latest Netco bids

Meanwhile, TIM has yet to firm up long-gestated plans to sell its fixed network infrastructure (dubbed Netco), including the assets of FiberCop as well as a stake in Sparkle, TIM’s international services unit.

The telco's board is currently reviewing two new non-binding offers it received for Netco at the beginning of June: one from Italian state-backed lender CDP and Australian fund Macquarie Infrastructure; and another from US private equity fund KKR.

Worth noting is that CDP and Macquarie already own TIM’s fiber-optic rival Open Fiber. In addition, TIM’s board turned its back on an earlier bid from KKR in a spat over due diligence, although the investor has continued to submit bids since then.

According to a report from the Financial Times (paywall applies), the board is currently leaning toward KKR, and is expected to back the opening of exclusive negotiations with the investor following a meeting on Thursday.

However, TIM shareholder Vivendi, which voiced opposition to the previous bid by KKR to take TIM private, apparently still intends to fight a proposed sale of the landline network to KKR. The FT report said Vivendi still believes that KKR’s offer undervalues the network and that any sale would be a strategic mistake.

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— Anne Morris, contributing editor, special to Light Reading